I've invited Lisa Lutoff-Perlo, President and CEO of Celebrity Cruises, the premium brand in the Royal Caribbean family, to speak to our graduate students next week. One of the issues on our agenda will be the importance of creating and reinforcing a well-defined corporate culture that supports strategy and an overall vision of what an organization wants to be. What I expect our students will realize is that culture is a complicated mix of systems, attitudes, and values linked to the ways in which the organization accomplishes its goals.
Our students are excited to welcome Lisa. The curricula of our Professional Studies master's programs, though diverse across disciplines, are designed to develop expertise in data analysis, strategic thinking, and management and leadership skills. And, integrated into our management and leadership training is the importance of defining and disseminating a strong corporate culture that links back to that analysis and strategy. Lisa will provide the perfect bridge between theory and practice--through an executive's lens.
Aligning culture with strategy can, of course, go right or wrong for a company. Some of the most successful companies have built their fortunes on the integrity of their unique work environment. Corporations such as Google and GE are representative examples. Other organizations can lose sight of the big picture and allow inappropriate systems, values, and attitudes to develop. As an example, it was recently revealed that Wells Fargo employees created phantom accounts to make stringent sales quotas, and overcharged customers in the process. This is clearly an example of culture gone askew. How did the bank's results-driven culture supercede the legal implications of employee actions? Did the bank's leadership consider all facets in its mission statement and strategy? How did the bank's operational processes, leadership, and informal norms allow the culture to stray away from the ethical? Questions of company culture should come under great scrutiny in situations like this.
Culture pervades everything a business does and has a profound effect on how it grows and succeeds. It affects strategic decisions from hiring to product development to geographic expansion. Analyzing three corporate examples, let's dive into what well-defined organizational culture models and the types of strategic ends they can support:
- Google's culture supports a strategy that depends on constant development and innovation;
- PricewaterhouseCoopers, which traditionally has had a young workforce, developed a culture in which employees of varying ages can overcome generational differences in expectations;
- General Electric has weathered many changes over its 130-year history and strategically emphasizes a culture of agility.
Fostering Innovation at Google
Megatech companies are famous for their cultures of innovation, and at the forefront of these is Google.
Eric Schmidt and Jonathan Rosenberg, in How Google Works, write about the very conscious steps taken to keep Google's culture of innovation in motion. With a flat leadership model, messy desks, and crowded offices, employees (there called "smart creatives") are encouraged to avoid processes, invest their time in "moonshot" projects, and continuously work together to always improve the product. When Sergey Brin and Larry Page took the company public in 2004, they included a mission statement with the IPO.
"The founders didn't care about maximizing the short-term value and marketability of their stock, because they knew that recording the company's unique values for future employees and partners would be far more instrumental to long-term success. As we write this today, the arcane details of that IPO a decade ago are a matter of history, but phrases like 'long-term focus,' 'serving end users,' 'don't be evil,' and 'making the world a better place' still describe how the company is run." Google's employees were told to think in grand terms about what they could achieve, and they were given a safe environment where they could try out ideas without fear that short-term interests would trump the company's commitment to ideas, progress, and ethics. By defining the atmosphere they knew would best foster innovation, they were taking active steps to create an ideal Google culture.
With a codified mission statement in place, Google's smart creatives have been on the cutting edge of tech innovation for over fifteen years, with everything from optimized search and Google Maps to self-driving cars to show for it.
Bridging Generations at PwC
Teaching employees how to respond to cultural shifts can be crucial to maintaining a competitive advantage. PricewaterhouseCoopers--a company well known for employing large numbers of young workers--noted how the generational gap between millennial (which now comprises 80% of its employees) and non-millennial employees was beginning to affect workplace needs and attitudes. PwC conducted studies and educated employees of findings in order to implement changes that support employee recruiting, retention, teamwork--with the ultimate goal of delivering consistently high-quality services to clients.
Bob Moritz, the Global Chairman of PricewaterhouseCoopers International, explains how PwC uses education to bridge the culture gap between generations: "Millennials are often stereotyped as self-absorbed, quick to shift their loyalties, lazy, and uncommitted to work...At PwC we've used education to address assumptions like these. We've helped Boomers see that although Millennials may be more aware of the ill effects of stress, and may value nonwork interests and activities more than Boomers do, they're every bit as committed to the success of the firm. They're simply not prepared to sacrifice their health and well-being for it."
This is a case where bridging a generational gap might not have happened naturally without a push from the company but was necessary for teams to function well for their clients. To support a culture that allows diverse employees to work together and feel invested in the company long-term, all of its employees needed to shift how it understood and reacted to the expectations of nearly 80% of its millennial workforce. Recruiting and retaining such a large group of employees--and making sure the rest of the talent could adapt--was strategically important to the success of the company.
Emphasizing Agility at General Electric
Former CEO Jack Welch knew the importance of defining a corporate culture--he advised others to "communicate [culture] constantly and reinforce with rewards." But even as Welch's specifically-defined culture needed to evolve over time, his emphasis on reinforcing a solid culture remains.
General Electric has traditionally prided itself on its culture of preparation and competitiveness. GE must always operate using data-based decision making, with everything tied to the company's bottom line. But working on such a large global scale, the company must continuously rework its processes to remain agile.
GE surveyed its employees last year. The responses informed a newly defined culture, and the crowdsourced effort was named "The GE Beliefs." "Customers determine our success, stay lean to go fast, learn and adapt to win, empower and inspire each other, and deliver results in an uncertain world. They reflect a renewed emphasis on acceleration, agility, and customer focus."
Ushering in a new culture, and allowing it to continually evolve, makes sense for an older company like GE. The VP of Human Resources at GE Healthcare, Raghu Krishnamoorthy, talks about this: "At GE, we have stayed competitive for more than 130 years because of our relentless quest for progress on all fronts, including culture. We believe that there is no such thing as a 130-year culture. In our opinion, culture is contextual, and what would have been appropriate in the 19th century, when the company was a one-product, one-country organization, is very inappropriate in today's far more globalized environment. (GE now operates in 175 countries across the globe.) So a constant reengineering of our business portfolio, operating model, and culture has been a key to our evolution."
What is your company's corporate culture? Are there systems in place to measure and reward the behaviors you are seeking? Is there education you need to provide to shape attitudes and understanding of others? Are your leaders ready to rethink what a culture needs to be in order to adapt to new marketplace demands? We are excited to invite leaders like the CEO of Celebrity Cruises, who can provide yet more stories about culture, to speak to our students, and marry the academic ideas taught in the classroom to real-world examples from the professional world.